Use access key #2 to skip to page content.

reddingrunner (97.46)

Facebook IPO

Recs

12

February 02, 2012 – Comments (3)

I got this today from AAII (guess who they're talking about):

Investors are constantly told to read prospectuses and annual reports. Yet many do not. This is a shame because doing so can reveal important information. 

Consider the following details from a registration statement that was recently filed with the U.S. Securities and Exchange Commission (SEC):

The company has a very limited operating history and profits have only been realized during the past three years.The primary source of revenues is advertising, but customers are changing to a platform (mobile devices) that the company does not generate any meaningful revenue from.Subscriber growth will slow because of the company’s high penetration rates in its current markets.The CEO controls the majority of all voting power, including final say over who gets elected to the board of directors. Furthermore, because the company is a “controlled company,” the board of directors does not have to be independent.The CEO says his company “was not originally created to be a company” and that he has “always cared primarily about [the company’s] social mission.”Last year, the company spent nearly $700,000 on a corporate jet used in part to fly the CEO’s friends and family.The company anticipates that a substantial number of shares could be sold up to 18 months following the completion of its initial public offering.

 

If this was all you knew about the company, would you buy shares in it?  

3 Comments – Post Your Own

#1) On February 02, 2012 at 11:07 PM, awallejr (82.68) wrote:

Actually what concerned me more was the CEO saying he is not concerned about profits.

Report this comment
#2) On February 03, 2012 at 11:24 AM, Rehydrogenated (32.66) wrote:

We all know the Facebook IPO is a game of chicken. But it will be the biggest game of chicken in the world when it happens, which means a lot of people are going to play.

Report this comment
#3) On February 03, 2012 at 4:16 PM, TMFAleph1 (96.00) wrote:

"So what are its plans for the additional $5bn it may raise from an IPO? It intends to put the cash into US government bonds and savings accounts, and perhaps use some to pay the tax due on converting into shares the “restricted stock units” it has given to its 3,200 staff.

That’s right. Its sole tangible purpose for the IPO proceeds is to meet a tax obligation that will be triggered by going public. Welcome to the Catch-22 world of the venture capital liquidity event."

 

Facebook ought to ditch its public offering, FT, Feb. 2 

Report this comment

Featured Broker Partners


Advertisement